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• Junior Credit – funds investing predominately in junior or specialist debt with varying levels of equity exposure. These funds are typically investing via the primary market. In days gone by, they may have called themselves mezzanine funds.

Notwithstanding these variations in strategy, the structural considerations for these types of closed ended credit fund are similar.

Fund vehicle

To date, the general preference for a closed ended credit fund with a UK or US nexus has been a limited partnership. Not only does this vehicle usually lend itself to the commercial terms of the fund, it is generally considered to be the most tax efficient vehicle for tax paying participators (including carried interest holders) and is also what investors expect to see.

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